Can global avocado supply keep up with demand?

by Tim Linden | March 17, 2017

This summer, the fledgling World Avocado Organization will launch its first promotion in Europe in an effort to continue to grow that market, which is already the second-largest market in the world, consuming about 800 million pounds of avocados per year.

Xavier Equihua, who is the chief executive officer of both the WAO and the Peruvian Avocado Commission, said the use of the avocado in the European Union and the United Kingdom is still quite limited. Consumption has doubled in the United States in the last decade largely because of the versatility of the avocado and the use of it at virtually any time of the day. Avocado toast has become a darling of the foodies and is emblematic of its acceptance on any plate at any time.

Equihua said that just isn’t the case in the E.U. and U.K. “Versatility is what makes the avocado unique,” he said. “That’s the message we will be bringing to this promotion.”

The WAO executive said there are lots of parallels between U.S. consumers and their European counterparts. He is confident that similar per-capita consumption gains can be made with the right type of promotions.

That view appears to be held by many in the avocado industry who have initially joined the WAO and are launching this promotion. Producers from Peru, South Africa and the United States were the early supporters, but Equihua noted that at the group’s first organizational meeting held in Berlin in February, there were more than 120 avocado producer, exporter and importer leaders from the United States, Peru, Mexico, South Africa, Chile, Brazil, Kenya, Zimbabwe, Colombia and elsewhere.

Jim Donovan, senior vice president of sourcing and logistics for Oxnard, CA-based Mission Produce Inc., is treasurer of the WAO and equally supportive of its goals. He strongly believes that the per-capita avocado consumption level of the E.U. and the U.K. can reach the same levels currently being experienced in the United States. Considering there are more people in that region, that could mean an explosion in demand over the next decade.

Add in increasing consumption in South America and the burgeoning Asian market, and it is a legitimate question to ask where the supply will come from.

“That is the $64,000 question,” said Robb Bertels, Donovan’s colleague and the vice president of marketing at Mission. “The biggest issue we have on a daily basis is making sure we have the supply to support the demand that we currently have in North America and Asia. Chile’s consumption has grown and we expect the same thing will happen in Peru and the rest of South America.”

Equihua agreed that there is a finite number of avocados in the world, but he also expects that production will increase as demand rises. “Some countries are already maxed out, but there is room for growth elsewhere.”

Donovan said that he remembers commenting as far back as 10 years ago at a Hass Avocado Board meeting that the “problem we have is with supply, not demand.” But he added, “That’s a good problem to have.”

The Mission and WAO executive is not overly worried that supply will catch up with demand. Because it takes as long as seven years to get an avocado tree into good production, Donovan said demand can increase faster than supplies but he believes supplies can catch up.

“We will have periods where we are out of balance, but that should lead to a surge of supply, which will put us back in balance again.”

Following the moneyAs demand increases and the price of an avocado increases, these experts expect avocado acreage to increase. Even in California, which he called “a difficult place to grow” because of water issues and regulatory concerns, Donovan said he has seen renewed interest in growing avocados.

He noted that as land and production costs increased over the years, much of the acreage in his region went to strawberries, which are considered to be a crop with about the best potential for return per acre.

“I know a strawberry grower [in Ventura County] that recently converted a strawberry field to an avocado grove,” he said.

Donovan also said there are increased plantings in several African and South American countries and he also expects countries closer to Asia to increase production as that market is developed.

“We are seeing more interest [in avocado production] in Australia and New Zealand [for supplying the Asian market],” he said.

As demand increases in other parts of the world, another huge question is how the U.S. market will meet its growing demand. That is another question that doesn’t seem to worry these suppliers.

Bertels said while it is true that Mission now has both an office and forward distribution facility in the Netherlands to help satiate the demand in that region, the U.S. market is still its No. 1 market. Most avocados are still grown in North America and South America, with the U.S. being both the closest and the best market — at least for the time being.

For Peru, developing a new market makes great sense and is helping to fuel continued growth on the supply side. For example, Bertels said Mission has new production in Peru that is earmarked entirely for Europe.

Equihua concurred, noting that it makes much more sense to promote in undeveloped markets than well-developed markets. “You get a much better ROI on your promotion dollars,” he said.

With California and Mexico growers facing shorter crops this year, it seems likely that demand is going to exceed supply throughout the summer, which might seem like a questionable time to launch a new promotion in Europe.

But Donovan of Mission disagreed. He takes the long view and believes increasing demand for your product is always a good thing.